The US Department of Justice isn't the only one suing Apple and e-book …

Sixteen states have joined the US Department of Justice in suing Apple and a number of publishers over allegedly colluding to fix e-book prices. Connecticut Attorney General George Jepsen made the announcement on Wednesday afternoon just hours after the DoJ filed its antitrust suit in New York, saying that Apple, Macmillan, Penguin, and Simon & Schuster engaged in an "anticompetitive price-fixing scheme" when selling e-books through Apple's iBookstore.

"Publishers deserve to make money, but consumers deserve the price benefits of competition in an open and unrestricted marketplace," Jepsen said in a statement. "Those interests clearly collided in this case and we are going to work to ensure the eBook market is open once again to fair competition."

The effort is being led by Connecticut and Texas, with Alaska, Arizona, Colorado, Illinois, Iowa, Maryland, Missouri, Ohio, Oregon, Pennsylvania, South Dakota, Tennessee, Vermont, West Virginia, and Puerto Rico joining the ranks. The states aren't targeting all of the publishers originally accused of plotting with Apple, though. Harper Collins and Hachette have already come to an agreement with the states that they will provide restitution to consumers "using a formula based on the number of states participating and the number of eBooks sold in each state." The specific details of the settlement have yet to be worked out, according to Jepsen, but will be finalized in the coming weeks.

Finally! Instead of negotiating the prices they wanted and the profit they wanted from the publishers, Apple made sure that providers such as Amazon couldn't sell books for less than Apple. I hope they turn Apple into Apple PIE!

Seriously, all the guys that think of Apple as awesome and lambast MS as the "evil convicted monopolist" that wants to screw consumers is going to have a hard time accepting this. This wasn't Apple 10 years ago, this is Apple now.

Market dominance leads to market abuse pretty much every time, no matter what the company.

Seriously, all the guys that think of Apple as awesome and lambast MS as the "evil convicted monopolist" that wants to screw consumers is going to have a hard time accepting this.

They're too busy apologizing for or outright denying Apple's bad behavior. You know, the very same things that they lambasted MS-aficionados for ~15 years ago.

Quote:

Market dominance leads to market abuse pretty much every time, no matter what the company.

Agreed. There's very little deterrence and plenty of incentive to behave this way, so it's unsurprising that corporations, sociopathic profit-makers that their very existence dictates they be, act this way, regardless of market. Start fining this sort of behavior 200% (or even 300%) of the profits gained and perhaps we'd see things change.

Seriously, all the guys that think of Apple as awesome and lambast MS as the "evil convicted monopolist" that wants to screw consumers is going to have a hard time accepting this. This wasn't Apple 10 years ago, this is Apple now.

Market dominance leads to market abuse pretty much every time, no matter what the company.

"If you could make God bleed, people would cease to believe in him"

I'm waiting for the day when the people who proudly tout Apple as the most profitable tech company admit that this means that Apple could stand to lower their prices.

Anyway, on-topic, It's telling that a number of publishers chose to settle rather than fight this. Maybe their war-chest isn't as well stocked, but I'm under the assumption that the settlements would indicate a tough road ahead for those fighting the allegations.

Finally! Instead of negotiating the prices they wanted and the profit they wanted from the publishers, Apple made sure that providers such as Amazon couldn't sell books for less than Apple. I hope they turn Apple into Apple PIE!

Not that I am supporting Apple completely here, but it would be hard for them to accept the "agency" model without some sort of price guarantees.

After all, if Apple is simply going to let the publishers determine the retail price of the book, and then let Apple take 30%, Apple could end up paying a much higher price than others. Apple could end up paying a higher cost to the publishers than Amazon sells the books for.

Think of it this way. Apple sells a book for $14.99 because that it is the price that the publisher sets. So Apple gets 30% or $4.50, making their cost $10.49. If Amazon is selling the same book for $9.99, then Apple is essentially getting screwed by the publisher, having to pay the publisher more then Amazon is selling the same item for.

That being said, I think it would be very beneficial for the price of ebooks to come down.

This will be very interesting as Apple basically applies this same principal to all content they resell. I think everything is now the "Agency" model where the content owner sets the price and Apple gets 30%. This is for music, apps, movies, tv shows, books, textbooks, etc.

I'm not sure about the terms of those other contracts, but its no wonder Apple is going to fight this.

Think of it this way. Apple sells a book for $14.99 because that it is the price that the publisher sets. So Apple gets 30% or $4.50, making their cost $10.49. If Amazon is selling the same book for $9.99, then Apple is essentially getting screwed by the publisher, having to pay the publisher more then Amazon is selling the same item for.

You seem to think Apple is keeping actual inventory for a digital product. Apple is not paying anything as they are not providing anything (just the store). All Apple gets is a 30% cut of what the product sells for.

Seriously, all the guys that think of Apple as awesome and lambast MS as the "evil convicted monopolist" that wants to screw consumers is going to have a hard time accepting this. This wasn't Apple 10 years ago, this is Apple now.

Market dominance leads to market abuse pretty much every time, no matter what the company.

I never hated on MS but I cant wait to see Apple being ripped apart by the DoJ and the EU.

Think of it this way. Apple sells a book for $14.99 because that it is the price that the publisher sets. So Apple gets 30% or $4.50, making their cost $10.49. If Amazon is selling the same book for $9.99, then Apple is essentially getting screwed by the publisher, having to pay the publisher more then Amazon is selling the same item for.

You seem to think Apple is keeping actual inventory for a digital product. Apple is not paying anything as they are not providing anything (just the store). All Apple gets is a 30% cut of what the product sells for.

Its just an example to show that the agency model conflicts with the standard model.

The fact they don't hold inventory makes no difference that they are paying more for an item then others are selling it for.

So let's say Apple loses, which I think they will. What if they just pull out of the eBook market altogether? Wouldn't that basically give Amazon a monopoly (again)? And wouldn't that be the opposite of the DoJ's goal?

Apple is not a loss leader. They like sound business models where they're actually making money. I have no problem with the Agency Model, it's Apple's price requirement that is getting them into trouble.

Then again, what if Apple does play Amazon's game and becomes a loss leader? That's a game Amazon can't win, not with the almost infinitely deep pockets that Apple has.

I'm all for going after the publishers for conspiracy, but Amazon's practice of selling below cost (in order to maintain its own dominance) also seems like anticompetitive behavior. No matter who wins, the customer loses.

Just because there isn't a physical product, doesn't mean there isn't inventory. Apple does have to store the data for the book along with backups. IIRC, they were ripping the music into AAC format for the music publishers, so I don't know what part they play in the electronic book publishing. Aren't they also responsible for tying the book to the .me account info?

I also think this may result in more draconian DRM measures. ie one device per book.

Also, does Apple set the price or do they just add their 30% and say that others can't sell it for more? I would think the publishers should be the ones getting into trouble as they are setting the actual prices.

Just because there isn't a physical product, doesn't mean there isn't inventory. Apple does have to store the data for the book along with backups. IIRC, they were ripping the music into AAC format for the music publishers, so I don't know what part they play in the electronic book publishing. Aren't they also responsible for tying the book to the .me account info?

I also think this may result in more draconian DRM measures. ie one device per book.

Also, does Apple set the price or do they just add their 30% and say that others can't sell it for more? I would think the publishers should be the ones getting into trouble as they are setting the actual prices.

It's the publishers colluding on price combined with Apple's stipulation that price can't be lower elsewhere that gets them into trouble. Getting rid of that requirement should make the DoJ go away, in my opinion. Then again, maybe they just want to get rid of the Agency Model entirely...

Its just an example to show that the agency model conflicts with the standard model.

The fact they don't hold inventory makes no difference that they are paying more for an item then others are selling it for.

Sounds like their business model is flawed to me. The solution in this case shouldn't be to collude with suppliers to artificially inflate the wholesale prices for competition (oopsie, illegal), but rather to leverage market position to negotiate more favorable wholesale prices for themselves.

Think of it this way. Apple sells a book for $14.99 because that it is the price that the publisher sets. So Apple gets 30% or $4.50, making their cost $10.49. If Amazon is selling the same book for $9.99, then Apple is essentially getting screwed by the publisher, having to pay the publisher more then Amazon is selling the same item for.

You seem to think Apple is keeping actual inventory for a digital product. Apple is not paying anything as they are not providing anything (just the store). All Apple gets is a 30% cut of what the product sells for.

Its just an example to show that the agency model conflicts with the standard model.

The fact they don't hold inventory makes no difference that they are paying more for an item then others are selling it for.

Um, what in the world are you talking about? If the publisher sets a wholesale price of 14.99 (highly unlikely), then Apple sells it for 14.99 + 30%. Amazon sells it for 9.99 and takes a 5.00 hit on each sale. Please never open a business.

Also, does Apple set the price or do they just add their 30% and say that others can't sell it for more? I would think the publishers should be the ones getting into trouble as they are setting the actual prices.

Since, by their terms, no one can sell the product for cheaper than Apple, if the ebook actually costs $10, Apple sells it for $13 ($10 + Apple's 30% markup). Everyone else has to also sell for $13. So either the publishers sell the ebook to everyone else for $10 and all those other stores have to mark it up to $13 and they get 30% or the publishers sell to other stores for some other price (say $12) and those other stores still have to sell it for $13 at the lowest and just make less than Apple does. Obviously, they could sell it for $14 but then everyone would just buy from Apple because Apple will be selling at $13.

It's time to take a hard look at the App Store too, and Apple's onerous conditions on selling content. The whole concept of having to jail break a device to buy apps also appears to be in violation of anti trust laws. Kodak got into trouble with this by demanding that purchasers of Kodachrome film had to have it processed by Kodak. They lost. Seems like the same rational should force apple to allow iOS Apps to be purchased from anyone, anywhere, just like both Amazon and Google have Android app stores. I don't mind buying apps from Apple, but I greatly resent them telling me that I can only buy apps from them.

Just because there isn't a physical product, doesn't mean there isn't inventory. Apple does have to store the data for the book along with backups.

What's the storage cost on 13 MB of storage (largest eBook that I have in my library at present) these days? I doubt that Apple has a separate file for each copy of a book they sell/have sold, so while there may well be 'inventory costs', it would realistically be nearly nil.

It's time to take a hard look at the App Store too, and Apple's onerous conditions on selling content. The whole concept of having to jail break a device to buy apps also appears to be in violation of anti trust laws. Kodak got into trouble with this by demanding that purchasers of Kodachrome film had to have it processed by Kodak. They lost. Seems like the same rational should force apple to allow iOS Apps to be purchased from anyone, anywhere, just like both Amazon and Google have Android app stores. I don't mind buying apps from Apple, but I greatly resent them telling me that I can only buy apps from them.

That's a pretty elegant solution to destroying the beauty that is iOS. I'll be a sad panda if that ever happens.

Finally! Instead of negotiating the prices they wanted and the profit they wanted from the publishers, Apple made sure that providers such as Amazon couldn't sell books for less than Apple. I hope they turn Apple into Apple PIE!

Not that I am supporting Apple completely here, but it would be hard for them to accept the "agency" model without some sort of price guarantees.

After all, if Apple is simply going to let the publishers determine the retail price of the book, and then let Apple take 30%, Apple could end up paying a much higher price than others. Apple could end up paying a higher cost to the publishers than Amazon sells the books for.

Think of it this way. Apple sells a book for $14.99 because that it is the price that the publisher sets. So Apple gets 30% or $4.50, making their cost $10.49. If Amazon is selling the same book for $9.99, then Apple is essentially getting screwed by the publisher, having to pay the publisher more then Amazon is selling the same item for.

That being said, I think it would be very beneficial for the price of ebooks to come down.

This will be very interesting as Apple basically applies this same principal to all content they resell. I think everything is now the "Agency" model where the content owner sets the price and Apple gets 30%. This is for music, apps, movies, tv shows, books, textbooks, etc.

I'm not sure about the terms of those other contracts, but its no wonder Apple is going to fight this.

You are forgetting that it was Apple pushing for this all along. At the time 30% was their policy for everything in the apps store, funny how the publishers came up with that same figure after Apple approached them isn't it? Truth is that Apple wanted it's 30% and that just priced them out the market so this little idea let them force Amazon's prices up to match. Even better with their later policy of 30% on everything purchased "In App" meant they could force competing eReaders of the app store altogether (70% publishers 30% app store payment = 0% for Amazon).

For everyone staying Apple is the new Microsoft. THEY HAVE ALWAYS BEEN LIKE THIS! They have always treated their partners/devs as pawns (look at the dirty tricks with Adobe). Walked over other people's trademarks and IP etc (even nicked the design for a major ad campaign from a British artist: asked to see his portfolio and then said they weren't interested only to use it anyway), also they have always been very insular trying to keep competitors off their platforms. It's just that they have been so good at managing their PR they can usually bury all their stinking turds before anyone smells them. Only just recently are they big enough for those turds to be too big to go unnoticed no matter how much they shovel.

It's time to take a hard look at the App Store too, and Apple's onerous conditions on selling content. The whole concept of having to jail break a device to buy apps also appears to be in violation of anti trust laws. Kodak got into trouble with this by demanding that purchasers of Kodachrome film had to have it processed by Kodak. They lost. Seems like the same rational should force apple to allow iOS Apps to be purchased from anyone, anywhere, just like both Amazon and Google have Android app stores. I don't mind buying apps from Apple, but I greatly resent them telling me that I can only buy apps from them.

That's a pretty elegant solution to destroying the beauty that is iOS. I'll be a sad panda if that ever happens.

But you wouldn't have to buy from other vendors. You could, but wouldn't have to. Your iOS experience could remain as beautiful as it does today, while allowing others to make their experience fit their definition of beautiful. Others would prefer that choice, and you would refuse them?

Think of it this way. Apple sells a book for $14.99 because that it is the price that the publisher sets. So Apple gets 30% or $4.50, making their cost $10.49. If Amazon is selling the same book for $9.99, then Apple is essentially getting screwed by the publisher, having to pay the publisher more then Amazon is selling the same item for.

You seem to think Apple is keeping actual inventory for a digital product. Apple is not paying anything as they are not providing anything (just the store). All Apple gets is a 30% cut of what the product sells for.

Its just an example to show that the agency model conflicts with the standard model.

The fact they don't hold inventory makes no difference that they are paying more for an item then others are selling it for.

Um, what in the world are you talking about? If the publisher sets a wholesale price of 14.99 (highly unlikely), then Apple sells it for 14.99 + 30%. Amazon sells it for 9.99 and takes a 5.00 hit on each sale. Please never open a business.

I think you need to go back and understand how the "Agency" model works.

The $14.99 price is the retail prices that the publisher wants to book to sell for. So Apple sells that for $14.99 and takes 30%. The $14.99 is not wholesale, and Apple does not add 30% to that. Even if Amazon is selling at a loss, their selling price is still below what Apple has to pay the publisher.